BUSINESS PLAN

PREPARED BY:
GM Business Development Consult

April, 2014

Limited
PREPARED
BY:
GM Business
Development
P.O.BOX
62279 Dar EsConsult
SalaamLimited
Dsm
Tel: +255 715 737302, +255 784
-737302
Email: 737302
Website: www.gmconsultz.com
Email: info@gmconsultz.com1
Website: www.gmconsultz.com

Table of Content
TABLE OF CONTENT........................................................................................... III
LIST OF TABLE................................................................................................... V
EXECUTIVE SUMMARY.......................................................................................VI
SECTION ONE..................................................................................................... 1
INTRODUCTION.................................................................................................. 1
1.1
1.2
1.3
1.4
1.5
1.6
1.6
1.7
1.8

BACKGROUND AND THE PURPOSE OF THE INVESTMENT..........................................................1

COMPANYS OBJECTIVES.................................................................................................. 1
COMPANYS VISION AND MISSION......................................................................................2
SHARE HOLDERS........................................................................................................... 2
CURRENT PROJECTS........................................................................................................ 2
STRATEGIC GOAL FOR 2014-2019...................................................................................2
PAST FINANCIAL PERFORMANCE........................................................................................3
LEGAL STATUS............................................................................................................... 4
PURPOSE OF THE DOCUMENT........................................................................................... 4

SECTION TWO.................................................................................................... 6
2.1
MICROECONOMIC BACKGROUND........................................................................................ 6
2.2
MARKET....................................................................................................................... 6
2.3
CLIENTS....................................................................................................................... 7
POPULATION............................................................................................................................ 7
FINANCIAL ACCESS.................................................................................................................... 7
FINANCIAL LITERACY.................................................................................................................. 7
SOURCES OF INCOME................................................................................................................ 7
USE OF CREDIT AND LOAN FACILITIES............................................................................................ 7
USE OF SAVINGS FACILITIES........................................................................................................ 8
SECTION THREE................................................................................................. 9
3.2
3.3
3.4
3.6
3.7
3.8
3.10

Transport Network:................................................................................................ 9
Quality Control of Products....................................................................................9
SYSTEM OF RECORD KEEPING........................................................................................... 9
PRICING STRUCTURE..................................................................................................... 10
LOAN AMOUNTS AND REPAYMENT CONDITIONS..................................................................10
CREDIT RISK............................................................................................................... 10
OPERATIONAL RISK....................................................................................................... 10

SECTION FOUR................................................................................................. 11
MARKETING ASPECTS.......................................................................................11
4.1
4.2
4.3
4.4
4.5
4.6

PRODUCT................................................................................................................... 11
MARKET AND SIZE AND COMPETITION..............................................................................11
Product Demand and Pricing of Products.............................................................11
PROMOTION................................................................................................................ 12
TARGETED CUSTOMERS................................................................................................12
MARKETING STRATEGY..................................................................................................12

SECTION FIVE................................................................................................... 13
FINANCIAL PROJECTIONS..................................................................................13
5.1 ASSUMPTIONS.................................................................................................................. 13
5.2
FINANCING PROPOSAL:.................................................................................................. 13
5.3
PROFIT AND LOSS STATEMENT:.......................................................................................13
5.4
CASH FLOW STATEMENT:............................................................................................... 14
5.5
SENSITIVITY ANALYSIS AND VIABILITY OF THE PROJECT:........................................................14
5.5
THE BALANCE SHEET:................................................................................................... 14
5.6
CONTRIBUTION TO THE PROMOTER..................................................................................14
5.7
EMPLOYMENT CREATION................................................................................................ 14
5.8
GOVERNMENT REVENUE................................................................................................14
SECTION SIX.................................................................................................... 16
HUMAN RESOURCE PLAN AND MANAGEMENT.....................................................16
6.1
6.2
6.3
6.4
6.4
6.5
6.6

MANAGEMENT AND ORGANIZATION..................................................................................16

BOARD AND MANAGEMENT............................................................................................ 16
KEY PERSONNEL:......................................................................................................... 17
CORE HUMAN RESOURCES ELEMENTS:..............................................................................17
TRAINING AND TECHNICAL ADVICE...................................................................................18
GENDER CONSIDERATIONS..............................................................................................18
HIV/AIDS ACTION PLAN............................................................................................... 18

SECTION EIGHT................................................................................................ 19
CONCLUSION AND RECOMMENDATIONS.............................................................19
8.1
SWOT ANALYSIS......................................................................................................... 19
8.1.1 Strengths............................................................................................................. 19
8.1.2 Weakness.............................................................................................................. 19
8.1.3 Opportunities....................................................................................................... 19
8.1.3 THREATS.................................................................................................................... 20
8.2
ECONOMIC AND SOCIAL BENEFITS:..................................................................................20
8.3
FINANCIAL BENEFITS:.................................................................................................... 20
8.5
CONCLUSION AND RECOMMENDATION:..............................................................................21

List of Table
Table 2: Profit & Loss Statement (TZS).......................................................................3
Table 3: Summary of Legal Status of the Company....................................................3
Table 4: Estimated Incremental Economic Return.......................................................5
Table 5: List of Farmers and respective location.........................................................7
Table 6: Sources of Raw Material................................................................................8
Table 7: Investment Plan............................................................................................ 9
Table 8: Product procurement Cycle.........................................................................10
Table 9: Different Product packing sizes...................................................................11
Table 10: Customers Value of sale & country of Destination....................................12
Table 11: Annual Sales Trend Monthly 2010/11........................................................14
Table 12: Demand per Customers............................................................................14
Table 13: The Proposed Prices of Products................................................................15
Table 14: Financing Plan(TZS)................................................................................... 16
Table15: Sensitivity Analysis Production Investment................................................16
Table 16: Impact and mitigation...............................................................................21

EXECUTIVE SUMMARY

XXXXXX.

SECTION ONE
INTRODUCTION

1.1

Background and the Purpose of the Investment

Twaweza Microfinance Limited was incorporated under the companies
Ordinance (Cap 212) on February 2013. TMs mission is to gear the
war against poverty through provision of loan services mainly to the
working poor as well as small and medium sized entrepreneurs. TM
aims at empowering disadvantaged people integrating a commercial
approach into a broad human development framework within the
United Republic of Tanzania.
The Company was founded by Dr. XXX and Mr. XXX who, along with
Mr.XX, are actively managing the company. TML has already started a
micro lending pilot project in Dar-City and has scheduled to roll it out to
200 families in the City (underserved area in Dar-Es-Salaam city), by
the end of 2019, in collaboration with other stakeholders.

1.2 Companys Objectives

Twaweza Microfinance Limited objective is to provide loans to small and
medium enterprises covered within the overall framework and mandate of
Twaweza Microfinance Limited. The specific objectives include;
i.

To assist the low income population to build their credit

worthiness, and to finance business expansion, education, and
other critical requirements of livelihood;

ii.

To promote equity by enabling the working poor to lift

themselves from poverty through financing their economic
activities as they continue to grow;

iii.

To promote a credit culture amongst small, and medium

entrepreneurs within Tanzania.

1.3

Companys Vision and Mission

1.4

Share Holders
The number of share holder is shown in the table below
Name of Shareholder

Number of
Shares

Mr. Emmanuel Mallya

Mr. Mike Mosha
Mr. XXXXX

Percentage

XX

XX%

XX

XX%

XXX

XX%

Detail about the shareholders and issued shares can be seen in the
memorandum of association as attached in attachment one.
1.5

Current Projects
What are the current projects

1.6

Strategic Goal for 2014-2019

TML intends to reach out to 7,000 poor families in Tanzania with

microloans in the next five years main focus areas will be Kinondoni
area, Mwenge, Ubungo,

Tabata, Kinyerezi, Chanika and Kigamboni.

Achieving this goal TML will expand its business in 2019 to Pwani
Region. TML management philosophy is to gain self sufficiency within
five years. For that purpose, the management restricts the fundraising
portion with a declining percentage of 100% in year one down to 55%,
in year two, 50% in year three and 30% in year four. In 2019, EEA does
not expect to require any more grants/loan.

1.6

Past Financial Performance

Based on the promoters financial records, it was evident in the
preparation of this business plan that the records are well kept which
has enabled preparation of audited financial statements. Summaries of
the promoters financial statements are as shown below.
Table 1: Profit & Loss Statement (TZS)
Particulars
2011
Gross Income
Gross Profit
Net Profit
Net
Profit

2012

2013

Margin
Sources: Audited Report 2013
From this performance, the company has been handling substantial
amount of money in revenue. The gross profit margins approximately X
% and net profit margins of the company are very low/high about (X%),
which gives the shareholders very little /good returns.
Table 2. Summarise Balance Sheet (TZS)
DESCRIPTION

YEARS
2011

2012

2013

Fixed Assets
Current Assets
Current
Liabilities
Net

current

Assets
Total Asset
Source: Extracted from the audited accounts

The balance sheet summarized in Table 2 above shows increases in

total assets over years. The increase is a result of accumulated profit,
stocks and acquired assets which has increased both current assets
and fixed assets.
1.7

Legal status
Twaweza Microfinance Limited is a legal entity and has acquired all
legal certificates and documents needed to operate microfinance
business. Some of the legal requirements fulfilled include:
Table 3: Summary of Legal Status of the Company
Company name
TWAWEZA MICROFINANCE
LIMITED

1.8

Companys Registration
Number

XXXXX on the XXX February

2013

Place of registration

Dar es Salaam, Tanzania

Company Type

Private Company Limited By

Shares

Business Type

Microfinance

VAT & TIN Number

40-XXXX and 111-XXX

Business License

MICROFIANCE Lisence NO.

XXXX

XXXXX

If any

Purpose of the Document

The company intends to increase its loan portfolio so as to reach more
clients in Dar es Salaam. Therefore this study is looking at the
profitability

of

the

company

and

rationally

of

expanding

loan

distribution channels and coverage to meet the customer growing

demand. The expansion program is coupled with financial limitations.

These necessitate the company to look for financial leverage from

financial institutions in terms of long term and short finance.
Furthermore, the study analyzed the company financial status,
management

structure,

security

and

established

projection

of

customer demand in the next five years and financial need for the
implementation of this project. The final output is a business plan
which looks into the economic and financial viability of undertaking
these investments.
SECTION TWO

MACROECONOMIC SITUATION IN TANZANIA

2.1

Microeconomic Background
Despite the high urbanization rate of Dar-Es-Salaam Region (93.9 %) and the
narrow to the capital, the Ilala Kinondoni and Temeke Districts are defined as
an urban agriculture sector. Only a quarter of an entire population is involved
in non-agriculture, mainly in the Informal Sector (95 % URT, 2008). Typical
small scale businesses include: street vendors, shop sales workers, and crafts
men. Majority of people work in petty cash businesses in which they can buy
only the food of the day. Although the poverty rate is only the half of the
country average, Dar es Salaam residents do not have savings for retirement,
medical expenses, life insurance, or plan for sending children to school.
Agriculture activities are based on small and large scale crop farming mostly
using poor hand equipments. GDP per capita for Dar-Es-Salaam estimated to
be USD 667 with 35% of the population earning an average low income of
USD 34 per month (URT - Dar-Es-Salaam City Profile, 2004).

2.2

Market
According to a study of PRIDE (Promotion of Rural Initiative and Development
Enterprises), a major microfinance oriented NGO, it is estimated that there
are close to twelve million small and micro entrepreneurs who need financial
services, and the number is growing by 4% percent annually, the majority of
whom are found in the rural areas (PRIDE, 2011). That is 20% of the
countrys population, mainly dealing in the informal sector.

At the beginning of their microfinance activities, TML is focusing on the urban

informal sector working poor. This sector contributes 43% of the country GDP.
Also it contributed 35% to the total urban labor force (URT, 2009). In Dar-EsSalaam Region, the informal sector offers about 65% of the city's labor force
(URT, 1995). Nearly two of three urban households own informal enterprises
(URT, 2003).
TML decided to boost informal sector by providing financial services to their
actors. Although there are contradicting views regarding the relationship
between poverty and the informal sector, without it, the poverty situation of
the affected families would have been much worse (Orlando, 2001).
2.3

Clients
Customer profile is based on survey results explored by Finscope, a
comprehensive national survey focused on the financial services needs and
usage across the entire Tanzania population (Finscope, 2007). The TRIODOS
Bank highlighted following characteristics of the potential microfinance
clients:

2.3.1 Population
57% of the adult population is less than 34 years, and mainly rural-based
(72%). In addition, there are approximately 14 Million people under 16 years.
2.3.2 Financial access
A large segment (40% overall; 45% of urban, 55% of rural) of the adult
population has no access at all to financial services, either formal or informal
(overall, 14% have a formal bank account (11% men, 5% women, 16% urban,
4% rural), 8% have access to semiformal finance [NGOs, Saving And Credit
Co-Operative Societies SACCOs] and 35% have access to informal finance
like ROSCAs/ASCAs and moneylenders these categories are mutually
exclusive). Only 20% of the population has access to formal bank in a 1 hour
walking distance.
2.3.3 Financial literacy
This is generally low, and lower still for women and for people living in rural
areas (92% of the population has heard of loans, but 84% do not understand
how interest rates work, or collateral, guarantors, opening an account etc.;
27% have never heard of a savings account). Beyond loans and savings,
financial literacy is close to nil (e.g. on insurance, Automatic Teller Machines).

2.3.4 Sources of income

Only 4% of the population is employed in the formal sector. Most people
make a living from agriculture, either by selling food crops (36%), cash crops
(12%), cattle/livestock produce (9%), or livestock (11%). Others run an
informal small business (28%), not (directly) related to agriculture. A large
majority of people (61%) go without cash income at times. Many (28%)
depend on getting money from family and friends.
2.3.5 Use of credit and loan facilities
Of those that borrow, most (38%) turn to family and friends. An additional
33% get loans from kiosks, 23% borrow in-kind (e.g. livestock). Only 4% have
a loan from a bank (5% of men, 1% of women). SACCOs and MFIs
(Microfinance Institutions) serve only a small percentage of all borrowers (9%
and 6% respectively).
2.3.6 Use of savings facilities
Most people with money do not save it with a bank or financial institution. Of
those who save, four out of ten favor saving in-kind (even more so in rural
areas) and three out of ten say they keep money in a secret hiding place
(similar for urban and rural). Another interesting aspect is that of the people
with a bank account (9%), many save with or borrow from informal providers
(48%), SACCOs (26%) or MFIs (15%).

SECTION THREE

BUSINESS ENVIRONMENT ANALYSIS

3.1
Location of the Investment,
TWAWEZA Microfinance Limited is located in XXX Kinondoni district situated XXX
km from city centre The promoter investment is very close to customer
intended to be supplied with Serengeti Breweries Products. Mwananyamala is at
the centre of Kinondoni area, Msasani, Kijitonyama and Mikocheni area.
3.2
Transport Network:
Transport communication network in Dar es salaam is good as all roads are
passable throughout the year. The promoters investment is easily accessible
throughout the year which make possible for the targeted customers walk into
Twaweza for credit and for repayments. The promoter is strategically located
with higher visibility to the intended customers which make it easier to deliver
products whenever needed.
3.3
Quality Control of Products
In order to ensure high quality products are delivered to esteemed customers,
the promoter will employ staff with proven good track record in credit
management, customer care and experiences in microfinance. This will minimize
customer complaints about delayed credits, loan repayment hence customer
retention.
3.4
System of Record Keeping
Currently the company has a robust system of keeping record that ensures the
repayment and disbursements are done on time. Despite existence of such
system the promoter are intending to buy more sophisticated system of record
management. The promoters have set aside TZS 3.5 million to acquire the
system.
3.5

Investment plan

The promoters plan to add three more truck and a pickup to add to the two
existing trucks to assist in delivering small quantities of products to its
customers. Currently, the promoter sometimes hires truck to deliver products to
customers whenever there is big order to deliver. The plan therefore, will enable
the company to procure products from SBL on time and delivery to customers
and cut down the cost of hiring trucks and ensure safety of the product. The plan
to procure two trucks will cost the company TZS 25million each. See details
below
Table 7: Investment Plan (TZS)

Land Buildings
Fixtures and Fittings
Motor vehicles
Pre - Operational Expenses
Total Fixed Investment
Working Capital
Total
Contribution Margin

Promoters Equity
3,560,000
6,400,000
13,200,000
3,250,000
26,410,000
30,000,000
56,410,000

Loan

50,000,000
50,000,000

Total
3,560,000
6,400,000
13,200,000
3,250,000
26,410,000
80,000,000
106,410,000

53.01%

46.99%

100.00%

3.6
Pricing Structure
TML charges 6% monthly interest using flat balance calculations. TML also
charges an upfront application fee of TZS 10,000 on all loans at the time of
disbursement. All lending has been transacted in local currency, with no indexing
to external values. The management decided to take a lower interest rate than
the market average, which would attract more customers at the beginning and is
in accordance to the Poverty Reduction Strategy of the Tanzanian government. If
the profitability projections turn out to be unacceptable, it will re-price the loan
product again.
3.7
Loan Amounts and Repayment Conditions
At the beginning of 2014, TML will offer a single loan product in Dar-Es Salaam
Region. Clients are required to put up a loan guarantee. TML will not offer a
grace period on repayments. Contractual loan terms varied between 1 and 3
months, it is projected that in general clients took an extra month to fully repay
their loans.
3.8

Credit Risk
Credit risk is defined as a potential loss that is indicated when a borrower fails
to repay a loan. TMLs risk prevention and collection strategy depend on the
reason for the imminent default: unwillingness or financial distress. Biweekly
and monthly collection procedures are part of an early risk recognition
system based on ongoing customer evaluation provided by the loan officers.
Different approval levels (loan officer manager credit supervisor) should
ensure a high quality loan application process. A borrower who is in financial
distress and is willing to repay their loans will be transferred to a flexible loan.
A flexible loan reduces the installment size and extends the maturity
depending on the customer payment ability. The company will hire an internal
auditor to implement a risk management system following the Basel II
requirements.

3.9

Liquidity Risk

Liquidity risk management will be done by the Finance Committee which

ensures that funding commitments can be met on time. For that purpose,
TML has considered a sufficient liquidity margin in their model.
3.10 Operational Risk
Operational risk is a main issue for a start up in finance with their limited
resources. Employees who are overloaded, undertrained or underpaid are the
primary driving force behind errors, fraud and mismanagement. TML decided
to serve and educate their employees from the beginning in a competitive
manner. This serves to increase their identification with the company. To
ensure proper operational procedures, reasonable controlling systems will be
developed from the beginning and will be managed by the Executive
Committee. An operational margin is implemented in the model to handle
any operational losses and liquidity gap.

10

SECTION FOUR
MARKETING ASPECTS

4.1

Product

Twaweza Microfinance Limited is a purely financial trading company which sells

credit to its targeted groups which are small and medium enterprises that is not
served by the banking system.
4.2

Market and size and Competition

The promoters main market is Dar es Salaam market specifically Kinondoni areas,
Msasani, Mwananyamala, and Kijitonyama a
The industry has many competitors from within Tanzania and outside. The main
driving factor being time taken to approve microcredit and costs associated to it.
However despite the existing competition the micro credit market is so huge as
supported by the following evidence: 54% of the Tanzanian adult population are
financially excluded and do not use either formal or informal financial products. Only
9% of the population use formal services and 1% use formal other financial services.
11% of people have a bank account, which breaks down to 16% in urban areas and
only 4% in rural areas. The semi-formal sector comprises 3%, made up of 1% using
semi-formal MFIs and 2% using semi-formal SACCOS. 35% of the population use
informal products (including friends and family) and 15% of the population use
friends and family as their sole source of financial access. This shows that there is
still substantial number of people who have not been able to access microcredit
through the existing institutions
4.3

Product Demand and Pricing of Products

Market price both products are fairly stable and largely depend on the market
forces. Based on the market trends for the past two years during the preparation of
this business plan, Market assessment has shown that there have been slight
seasonal price fluctuations during Government change of tax in alcohol products.

Table 11: Annual Credit Sales Trend Monthly

70,000
60,000
50,000
40,000
30,000
20,000
10,000
-

4.4

Year 1
Year 2
Year 3
Year 4
Year 5

Promotion

The promoters will make different campaigns to make its products known to wide
community. The main outlet will be through the existing customers and through
leaflets and fliers to be prepared and marketing campaigns to be launched in the 7 th
month of operations.
4.5

Targeted Customers

The promoters are targeting the working poor, small and medium enterprises that
are not served by the banking system due to many factors. The costs associated
with information on the risk and creditworthiness of the working poor and SME has
discouraged banks from landing related clients. The target group is big as only 23%
of the population has access to formal financial sector
4.6

Marketing Strategy
The promoter will set attractive price (interest) compared to his competitors

to attract customers. Furthermore, the promoter will be advertising his products

through media, leaflets and brochures to inform the targeted customers about its
existing products and new once to be introduced at later stages. Also, the promoter
will establish a website where potential customers will be able to access different
information including, prices, how and where to apply for credit.

SECTION FIVE
FINANCIAL PROJECTIONS

5.1 Assumptions
In order to prepare financial projection for the promoter some assumptions were
made and these are as follows
TWAWEZA MICROFINANCES LIMITED
NOTES AND ASSUMPTIONS TO THE ANALYSIS
1

Production cycle will be stable and will follow the anticipated trends.

The company sells its produce in quantities that do not below

TZS200,000 and not exceeding TZS 3,000,000

The company uses the reducing balance method of depreciation at

following rates:

Plant and machinery

2.5%

Motor vehicles

20.0%

Furniture & equipment

12.5%

Pre operating Expense

20.0%

Interest income is charged on approved credit whereas the bank loan

is charged on outstanding balances.

5.2

Financing Proposal:

The total investment costs amounts to TZS XX million whereby TZSXXX million is
equity finance. The promoter intends to expand its business by adding new
equipments, motor vehicles, hiring bigger ware house and additional working
capital. The financing of the proposed new investment is as shown in table 14 below
and detail can be found in the annex 1.

5.3

Profit and Loss Statement:

The income statement shows that in the first year the net profit after Tax is TZS XXX
million, in the second year the net profit is TZS XX million and keep on increasing to
accumulate a net profit of over TZS XXX million in five years, for more details see
annex 7.
5.4

Cash Flow Statement:

The Net Cash flow depicts a positive balance of TZS XX million in the first year. The
accumulated cash amount to TZS XXXmillion in the fifth year. The project is able to
meet its financial obligations in the next five years, for details see Annex 8.
5.5

Sensitivity Analysis and Viability of the project:

The Net Present Value (NPV) of the project is TZS XXX and Internal Rate of Return
(IRR) is XXX% at discounting rate of XX %. Both measures suggest the project is
financially viable and economically sound.
5.5

The Balance Sheet:

The company Balance Sheet as shown in the Financial Schedules is positive. The net
worth of the company rises from TZS XXX million in year one to TZS XXX million in
year five. It will still have substantial cash balances investments. For Details see
Annex 8 and 9

5.6

Contribution to the Promoter

The investment to be undertaken will increase the invested capital to TZS XXX
million which is an increase of approximately XX%. The investment is expected to
increase the promoters net income to approximately TZS XX million in the first year
and TZS XX million from the fifth year.
5.7

Employment Creation

The business currently provides fulltime employment opportunities to 5 people who

receive approximately a total of TZS. XX million /= annual salary. The expansion of

the business will also increase the number of people employed. This number is
expected to increase with the increase in the volume of business.
5.8

Government Revenue

The government will receive additional revenue in the form of income tax to the
tune of approximately TZS XX million in the first year and TZS XX million in total in
the period of five years. The total incremental gross incremental return is estimated
to contribute to the economy to the tune of TZS XX million with indirect
employment of XxXindividuals.
Table 4: Estimated Incremental Economic Return
Direct Incremental Return to Investment ( TZS in million)
Investment

Return
to debt

Return to investor and

their employees

Financi

Value of goods and

Value of

Governm

services and people

produce and

ent

employed

farm

revenue

ng

families
benefiting

Equi

Loa

ty

Investor

No of

Wages

Value of

No of

Value of

employees

to

goods and

families

produce

per annum

employ

services

employe

ee

SECTION SIX
HUMAN RESOURCE PLAN AND MANAGEMENT

6.1
Management and Organization
The basics tasks and strategy of the management and organization of Twaweza
Microfinance Limited would aim at maintaining high quality distribution services that
add value to its customers. Secondly, it is the only strategy through which the
management can achieve high sustainable returns to its investors. The overall
strategic objectives can be stated as follows:

Achieving the distribution and revenue targets in the stipulated timeframe.

Maintaining a high profitability through sound financial control over
expenditures and retain a firm and competitive pricing policy for services

and products.
Increasing the value added for companys product and trading them at the

recommended rates.
To contribute to the development of the local economy (where the company
shall be operating), and the national economy generally through the creation
of jobs in the operations of the company and meeting necessary tax
obligations to the government.

The Company will implement its strategic plan through a process of Management by
Objectives.
Twaweza Microfinance Limited main foundation blocks will be its employees. The
company plans to carry out on - the - job training for most of its staff. In general the
company will ensure that employees get new skills and follow set procedures to
increase their productivity throughout. Skills will need to be developed that will
enable the company to react effectively and efficiently to new demands and market
trends.
The overall management team will be under a Board of Directors and the
Management Team headed by a Managing Director. The Organization Chart can be
seen under).
6.2
Board and Management
TML embraces the organizational leadership model with a leadership team capable
of formulating and shaping a coherent vision combined with a management team

skilled in implementing and rejuvenating the vision over time. This team is
comprised of an Executive Director working closely with Governing Board chair,
advisors and members committed to constructing and executing the strategies. The
Manager is responsible for the implementation and management of the vision,
specifically in the areas of microfinance, social business and entrepreneurial
education. The management of the company is vested in the Governing Board.
6.3

Key Personnel:

Twaweza Microfinance Limited business has hired permanently 23 personnel at the

processing business and has hired XX personnel on short term contracts that would
see the achievements of the set target. The senior technical staff would include.
Managing Director
Manager
Credit Officer
6.4

Core human resources elements:

The following human resources elements would significantly contribute to Twaweza

Microfinance Limited achievements.
Mr. Emmanuel Mallya who is Managing Director with more than 5 years
experience in the field of management. he will provide strategic leadership,
oversight, guidance on the execution of annual business plans. He will be
responsible

ensure

general

achievement

of

the

business

operations

specifically making sure that annual and monthly targets are realized. He is
also in-charge of soliciting the business capital and enters into legal
agreements with all third parties including financial institutions.
He is possessing msss..........please complete this area
Ms. XXXXXXX- who is a Manager, she has vast experience in the field of
finance and marketing, she will provide general oversight and manage all
sales and operations. She will be the main point of contact to daily company
operations including supervision of and management of all XXXXX

Name all the personel who will be operating the business, their
qualification and experiences

Security guards their roles will be to ensure general safety of goods and
products ,Ensure safety of staff and company resources, Inspect all orders

and certify proper authorization, Report any irregularities of standard

operating procedures, Reports to the general manager
6.4

Training and Technical Advice

The promoter has personnel with the necessary knowledge and experience in sales
and distribution of products, and the promoter will consult Consulting firms to
provide training for the staff whenever a need arise.
6.5

Gender considerations

The Promoter provides equal opportunities for both men and women when
employing the required labor for the investment.
6.6

HIV/AIDS Action plan

The promoter will make arrangements with district health centres, NGOs and other
HIV/AIDS campaigner to create awareness and prevention for his supporting staffs.
Furthermore the promoter will provide free condoms to its employees as a way to
prevent new HIV/AIDS case.

SECTION EIGHT
CONCLUSION AND RECOMMENDATIONS

8.1

SWOT Analysis

8.1.1 Strengths
Twaweza Microfinance Limited as a medium company has the potential for rising up
to become a successful and prosperous alcohol Trading company in the near future.
The following are considered to be, the strengths that the company has at its
disposal that can be relied upon to make the company grow and prosper.

Company is close to its customers which reduce logistical problems for the
principal client to access the services. This enable the company to deliver its

services to the customers at the minimum require time.

The company has competitive management which is able to organize its
marketing and distribution to ensure sustainability of the profitability trend.

8.1.2 Weakness

The promoters have not been able to secured enough collateral to enable
the company obtain commercial long term loan from commercial banks. The
few security the company has been used to obtain an overdraft to boost

companys working capital.

The company profitability margin is very low therefore needs some
improvement in its costing strategy. The focus should be to minimize the
direct and operation costs a.

8.1.3 Opportunities
In planning what can be done by the company during the next five years, the
consultants have taken into account the opportunities that exist for the company to
increase its net worth. The company may utilize the available opportunities that
exist as follows:

Promoters customers are well spread which reduces the risk of trading with
few customers and many customer have created loyalty to the promoter.
Therefore, the promoter has the advantage of using the existing customers to
expand its market base.

Furthermore there is expanding market of microcredit in Tanzania (as can be

seen in the last two years expansion of sales). This will enable the promoter
to optimize profit as it expands its business.

8.1.3 Threats
The company is facing various threats in the existing operational environment.
These include the following:

Competition: the presence of other players in the market is a threat the

Twaweza Microfinance Limited as a player in the market. However, with good
management and adequate capital resources required to achieve targeted
products distribution, the company should be able to gradually raise its

market share and compete successfully.

Customers may switch to our competitors. The drop out of major customer
will have damaging effects. The promoters will minimize this risk by having
competent personnel who will also be responsible to get customers feedback
(complaints).

8.2

Economic and Social Benefits:

The following are some of the indicators that justify Implementation /expansion of
the investment
i.

The Internal Rate of Return is XX% and The Net Present Value is at XX%

ii.

Discount Rate is TZS XXX

Employment creation both for men and women where the investment will

iii.

directly and indirectly employ approximately XXX people at its fully capacity.
The government will receive additional revenue in terms of income tax to a
tune of TZS XXXmillion and increase on average government Trading earnings
by TZS XXXmillion annually

8.3

Financial Benefits:

The Ipinda investment would be very profitable as: i.

The Promoters net profit will increase to a tune of TZS XXmillion annually
ii.

after the expansion programme.

The balance sheet would show the net worthy rise from TZS XX million to TZS
XXX at year 5.

8.5

Conclusion and Recommendation:

Twaweza Microfinance Company meet all the minimum requirement of which

include having a good lending policy, Well established market base, and offices

strategically positioned, and experienced management in microcredit trading

business.
TML investment is technically viable, financially profitable and economically sound
for implementation. We therefore recommend the promoter for a term loan of TZS
50,000,000 charged an interest not exceeding 13% annually which will be repaid
over a period of two years
.

ATTACHMENT

Annex 2. Depreciation
Cost
Initial
Item

YEARS

Value

Rat
e

3,560,00
0

2.5
%

6,400,00
0

13,200,0
00

Method

Reducing
balance

3,560,00
0
89,000
3,471,00
0

3,471,00
0
86,775
3,384,22
5

3,384,22
5
84,606
3,299,61
9

3,299,61
9
82,490
3,217,12
9

3,217,12
9
80,428
3,136,70
1

3,136,70
1
78,418
3,058,28
3

12.5
%

Reducing
balance

6,400,00
0
800,000
5,600,00
0

5,600,00
0
700,000
4,900,00
0

4,900,00
0
612,500
4,287,50
0

4,287,50
0
535,938
3,751,56
3

3,751,56
3
468,945
3,282,61
7

3,282,61
7
410,327
2,872,29
0

20.0
%

Reducing
balance

13,200,0
00
1,650,00
0
11,550,0
00

11,550,0
00
1,443,75
0
10,106,2
50

10,106,2
50
1,263,28
1
8,842,96
9

8,842,96
9
1,105,37
1
7,737,59
8

7,737,59
8

6,770,39
8

967,200
6,770,39
8

846,300
5,924,09
8

3,250,00
0
487,500
2,762,50
0
3,026,5
00

2,762,50
0
414,375
2,348,12
5
2,644,9
00

2,348,12
5
352,219
1,995,90
6
2,312,6
06

1,995,90
6
299,386
1,696,52
0
2,023,1
85

1,696,52
0
254,478
1,442,04
2
1,771,0
51

1,442,04
2
216,306
1,225,73
6
1,551,3
51

Land & Building

Opening Balance
Allowance
Closing Balance
Furniture/Fittings
Opening Balance
Allowance
Closing Balance
Motor vehicles
Opening Balance
Allowance
Closing Balance
Pre operating
Expenses
Opening Balance
Allowance
Closing Balance
Total
Depreciation

3,250,00
0

15.0
%

Reducing
balance

26,410,
000

Closing Balance

D.

23,383,
500

20,738,
600

18,425,
994

16,402,
809

14,631,
758

13,080,
407

OVERHEADS

Sr.N
o

10

11

12

Total

Particular

Rent

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

200,00
0

2,400,00
0

Electricity

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

600,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

120,000

Water charges
Postage,
Fax,
and
telephones
Printings,
internet
&
Stationery

Fuel

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

70,000
100,00
0
200,00
0

840,000
1,200,00
0
2,400,00
0

Bank charges

40,000

40,000

40,000

40,000

40,000

40,000

40,000

40,000

40,000

40,000

40,000

40,000

480,000

cleaning materials

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

40,000
250,00
0
960,0
00

480,000
3,000,00
0
11,520,0
00

10

professional expenses
Sub Total:

Sr.N
o
1
2

Particular
Rent
Electricity

Year-1

Year-2

Year-3

Year-4

Year-5

2,400,00
0

2,520,00
0

2,646,00
0

2,778,30
0

2,917,21
5

600,000

630,000

661,500

694,575

729,304

Water charges

120,000

126,000

132,300

138,915

145,861

Postage, Fax, and telephones

840,000

882,000

926,100

972,405

1,021,02
5

Printings, internet & Stationery

1,200,00
0

1,260,00
0

1,323,00
0

1,389,15
0

1,458,60
8

Fuel

2,400,00
0

2,520,00
0

2,646,00
0

2,778,30
0

2,917,21
5

14

Bank charges

480,000

504,000

529,200

555,660

583,443

15

cleaning materials

480,000

504,000

529,200

555,660

583,443

16

proffessional expenses

3,000,00
0
11,520,0
00

3,150,00
0
12,096,0
00

3,307,50
0
12,700,8
00

3,472,87
5
13,335,8
40

3,646,51
9
14,002,6
32

Total

Revenue Projections (green Colour)

Analysis
Principal
Annnual Interest Rate
Monthly Interest Rate
Total number of payments

80,000,000
72%
6.00%
24

Beginning
Balance

Payment No.
1

70,000,000

Interest
Payment
4,200,000

Total
Princial
and
Interest
74,200,000

Principal
Payment
2,083,333

Ending
Balance
72,116,667

2
3
4
5
6
7
8
9
10

72,116,667
74,360,333
76,738,620
79,259,604
81,931,847
84,764,424
87,766,956
90,949,640
94,323,285

4,327,000
4,461,620
4,604,317
4,755,576
4,915,911
5,085,865
5,266,017
5,456,978
5,659,397

11

97,899,349
101,689,97
7

5,873,961

12

Beginnin
g
Balance
13
14
15
16
17
18
19
20

105,708,0
42
109,967,1
91
114,481,8
90
119,267,4
70
124,340,1
84
129,717,2
62
135,416,9
65
141,458,6
49

6,101,399
60,708,04
2

Interest
Payment
6,342,483
6,598,031
6,868,913
7,156,048
7,460,411
7,783,036
8,125,018
8,487,519

76,443,667
78,821,953
81,342,937
84,015,180
86,847,758
89,850,290
93,032,974
96,406,619
99,982,683
103,773,31
0
107,791,37
6

2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333

74,360,333
76,738,620
79,259,604
81,931,847
84,764,424
87,766,956
90,949,640
94,323,285
97,899,349
101,689,97
7
105,708,04
2

25,000,000
Total
Princial
and
Interest
112,050,52
5
116,565,22
3
121,350,80
3
126,423,51
8
131,800,59
5
137,500,29
8
143,541,98
2
149,946,16
8

Principal
Payment
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333
2,083,333

Ending
Balance
109,967,19
1
114,481,89
0
119,267,47
0
124,340,18
4
129,717,26
2
135,416,96
5
141,458,64
9
147,862,83
5

21
22
23
24

147,862,8
35 8,871,770
154,651,2
71 9,279,076
161,847,0
14 9,710,821
169,474,5
02 10,168,470
96,851,59
7

156,734,60
5
163,930,34
8
171,557,83
5
179,642,97
2

2,083,333
2,083,333
2,083,333
2,083,333
25,000,000

154,651,27
1
161,847,01
4
169,474,50
2
177,559,63
9

Loan Repayment Schedule

Analysis
Principal

50,000,000

Annual Interest Rate

Monthly Interest Rate
Moratorium (Months)
Interest on drawdown
Total Loan Principal after
Moratorium
Total number of payments

Payment No.
1
2
3
4
5
6
7
8
9
10
11
12

13
14

13%
1%
3
50,000,000
5

Beginning
Balance
50,000,000
48,159,048
46,298,213
44,417,281
42,516,036
40,594,256
38,651,722
36,688,208
34,703,488
32,697,334
30,669,513
28,619,791

Beginnin
g Balance
26,547,93
2
24,453,69

Monthly
Payment
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952
2,380,952

Interest
Payment
540,000
520,118
500,021
479,707
459,173
438,418
417,439
396,233
374,798
353,131
331,231
309,094

Principal
Payment
1,840,952
1,860,835
1,880,932
1,901,246
1,921,779
1,942,534
1,963,514
1,984,720
2,006,155
2,027,821
2,049,722
2,071,859

28,571,429

5,119,361

23,452,068

Monthly
Payment
2,380,952
2,380,952

Interest
Payment
286,718
264,100

Principal
Payment
2,094,235
2,116,852

Ending
Balance
48,159,048
46,298,213
44,417,281
42,516,036
40,594,256
38,651,722
36,688,208
34,703,488
32,697,334
30,669,513
28,619,791
26,547,932

Ending
Balance
24,453,69
8
22,336,84

15
16
17
18
19
20
21
22
23
24

8
22,336,84
5
20,197,13
1
18,034,30
7
15,848,12
5
13,638,33
3
11,404,67
4
9,146,892
6,864,727
4,557,913
2,226,186

2,380,952

241,238

2,139,714

2,380,952

218,129

2,162,823

2,380,952

194,771

2,186,182

2,380,952

171,160

2,209,793

2,380,952

147,294

2,233,658

5
20,197,13
1
18,034,30
7
15,848,12
5
13,638,33
3
11,404,67
4

2,380,952
2,380,952
2,380,952
2,380,952
2,250,229
28,440,70
5

123,170
98,786
74,139
49,225
24,043

2,257,782
2,282,166
2,306,813
2,331,727
2,226,186

9,146,892
6,864,727
4,557,913
2,226,186
0

1,892,773

26,547,932

INCOME & EXPENDITURE STATEMENT

PARTICULARS

Year-1

Year-2

Year-3

Year-4

Year-5

Income
Total Sales

60,708,042
60,708,042

96,851,597
96,851,597

78,779,819
78,779,819

78,779,819
78,779,819

78,779,819
78,779,819

TOTAL REVENUE

60,708,042

96,851,597

78,779,819

78,779,819

78,779,819

11,520,000

12,096,000

12,700,800

13,335,840

14,002,632

Manpower
TOTAL EXPENDITURE

27,720,000
39,240,000

27,720,000
39,816,000

27,720,000
40,420,800

27,720,000
41,055,840

27,720,000
41,722,632

GROSS SURPLUS (YEARLY)

Deprecition
Interest on loan

21,468,042
3,026,500
5,119,361

57,035,597
2,644,900
1,892,773

38,359,019
2,312,606

37,723,979
2,023,185

37,057,187
1,771,051

Profit before Tax

Average Tax (30%)

13,322,181
3,996,654

52,497,923
15,749,377

36,046,414
10,813,924

35,700,794
10,710,238

35,286,136
10,585,841

NET PROFIT (POST TAX

DEDUCTIONS)
retained Earnings

9,325,527
9,325,527

36,748,546
46,074,073

25,232,490
71,306,563

24,990,556
96,297,119

24,700,295
120,997,414

INCOME

EXPENDITURE
Overheard costs

Profit (%) on Income (Post Tax)

Profit (%) on Expenditure (Post Tax)
Return (%) on Investment (Post Tax)
Return (%) on Equity (Post Tax)
Profit (%) on Income
Profit (%) on Expenditure
Return (%) on Investment
Return (%) on Equity

15.36%
23.77%
16.53%
41.82%
35.36%
54.71%
34.16%
56.94%

37.94%
92.30%
65.15%
59.94%
58.89%
143.25%
49.41%
82.35%

32.03%
62.42%
44.73%
78.05%
48.69%
94.90%
64.66%
107.76%

31.72%
60.87%
44.30%
96.17%
47.89%
91.88%
79.90%
133.17%

31.35%
59.20%
43.79%
114.28%
47.04%
88.82%
95.15%
158.58%

Monthly Income Statement

PARTICULARS

10

11

12

CAPACITY UTILIZATION

60%

75%

90%

90%

90%

Total Income

4,200,0
00
4,200,
000

4,327,0
00
4,327,
000

4,461,6
20
4,461,
620

4,604,3
17
4,604,
317

4,755,5
76
4,755,
576

4,915,9
11
4,915,
911

5,085,8
65
5,085,
865

5,266,0
17
5,266,
017

5,456,9
78
5,456,
978

5,659,3
97
5,659,
397

5,873,9
61
5,873,
961

6,101,3
99
6,101,
399

TOTAL REVENUE

4,200,
000

4,327,
000

4,461,
620

4,604,
317

4,755,
576

4,915,
911

5,085,
865

5,266,
017

5,456,
978

5,659,
397

5,873,
961

6,101,
399

TOTAL EXPENDITURE

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

960,000
231000
0
3,270,
000

GROSS SURPLUS (YEARLY)

930,00
0

1,057,
000

1,191,
620

1,334,
317

1,485,
576

1,645,
911

1,815,
865

1,996,
017

2,186,
978

2,389,
397

2,603,
961

2,831,
399

Deprecition
Interest on loan

252,208

252,208

252,208

252,208

252,208

252,208

252,208

252,208

252,208

252,208

252,208

252,208

426,613

426,613

426,613

426,613

426,613

426,613

426,613

426,613

426,613

426,613

426,613

426,613

Profit before Tax

251,178

378,178

512,798

655,495

806,754

967,089

1,137,0
44

1,317,1
96

1,508,1
57

1,710,5
75

1,925,1
39

2,152,5
77

INCOME
Income

EXPENDITURE
Overheard costs
Manpower

Average Tax (30%)

75,353

113,453

153,839

196,649

242,026

290,127

341,113

395,159

452,447

513,173

577,542

645,773

NET PROFIT (POST TAX

DEDUCTIONS)

175,82
5

264,72
5

358,95
9

retained Earnings

175,825

440,550

799,508

458,84
7
1,258,3
55

564,72
8
1,823,0
83

676,96
2
2,500,0
46

795,93
1
3,295,9
76

922,03
7
4,218,0
13

1,055,
710
5,273,7
23

1,197,
403
6,471,1
26

1,347,
597
7,818,7
23

1,506,
804
9,325,5
27

Yearly Cash Flow

1
Cash inflows
Equity
SELF Loan
Profit before Capital Charges
Total Cash Inflows
Cash Outflows
Fixed Assets
Initial working capital
Corporate tax
Loan repayment
Total cash outflow
Net cash flow
Cumulative cash flow

57,035,597
57,035,59
7

38,359,01
9
38,359,0
19

37,723,97
9
37,723,9
79

37,057,18
7
37,057,18
7

10,813,92
4

10,710,23
8

10,585,84
1

56,410,000
50,000,000
21,468,042
127,878,0
42
26,410,000
80,000,000
3,996,654
28,571,429

15,749,377
28,440,705

138,978,0
83
11,100,04
1
11,100,04
1

44,190,08
2

10,813,9
24

10,710,2
38

10,585,84
1

12,845,51
4

27,545,0
95

27,013,7
41

26,471,34
7

1,745,473

29,290,5
69

56,304,3
10

82,775,65
6

BALANCE SHEET
Annex 9. Balance Sheet
Projections
DESCRIPTION
CURRENT ASSETS
Cash
Working Capital
Total Current Assets
FIXED ASSETS (NET DEP.)
Land and Buildings
Furniture and fittings
Motor vehicles

YEARS
3

11,100,
04180,000,
000
68,899,9
59

1,745
,473
80,000
,000
81,745,
473

29,29
0,569
80,00
0,000
109,29
0,569

56,30
4,310
80,00
0,000
136,30
4,310

82,77
5,656
80,00
0,000
162,77
5,656

3,471,
000
5,600,
000
11,550,
000

3,384
,225
4,900
,000
10,106
,250

3,29
9,619
4,28
7,500
8,84
2,969

3,21
7,129
3,75
1,563
7,73
7,598

3,13
6,701
3,28
2,617
6,77
0,398

Pre operating Expenses

Total Fixed Assets
TOTAL ASSETS
REPRESENTED BY:
Equity
Retained Earnings
Loan
TOTAL

2,762,
500
23,383,5
00
92,283,4
59

2,348
,125
20,738,
600
102,484,
073

1,99
5,906
18,42
5,994
127,71
6,563

1,69
6,520
16,40
2,809
152,70
7,119

1,44
2,042
14,63
1,758
177,40
7,414

56,410,
000

56,410
,000

56,41
0,000

56,41
0,000

56,41
0,000

9,325,
527
26,54
7,932

46,074
,073

71,30
6,563

96,29
7,119

120,99
7,414

102,484,073.4
2

127,716,563.04

152,707,119.08

177,407,414.34

92,283,459.21